Summary

The large-scale cryptocurrency liquidation event on October 10th is viewed as a necessary market leverage reset, not the end of the bull market, creating a healthier structural foundation for near-to-medium-term gains. The market is expected to experience a slow recovery in the coming months rather than a rapid surge to new all-time highs, with institutional investors likely becoming the primary drivers of the next leg up. Fund flows indicate "smart money" is shifting from Solana and BSC towards Ethereum and EVM-tech stack ecosystems like Arbitrum, with yield protocols and Real-World Assets (RWA) gaining focus. Stablecoin data suggests this is a rotation of existing capital, not an influx of new money, meaning any rebound remains reliant on incentives and narrative-driven moves. Despite a complex macro environment, potential Fed rate cuts, ample liquidity, and crypto-friendly regulations could support the market, potentially extending the cycle into 2026.

Key Takeaways

* Despite persistent panic, we view the October liquidation event as a potential prelude to medium-term strength rather than a sign of weakness, creating a solid setup for Q4 performance.

* A full market recovery, however, may take months, with a gradual grind higher more likely in the interim than a vertical move to new record highs.

* Over the past 30 days, "smart money" flows within crypto have concentrated around the EVM tech stack and moved away from Solana and BSC.

Market Reset, Not Market Crash

Following the massive liquidation event on October 10th, we believe the crypto market has found a short-term bottom, with significantly improved market positioning. The market appears to have reset rather than crashed. We contend this sell-off has restored market leverage to a healthier structural state, which could support price action in the near-to-medium term. However, a slow ascent is more probable in the coming months than a direct sprint to new all-time highs.

Technically, this deleveraging event was more of a fundamental market adjustment than a solvency crisis, although the altcoin sell-off and market maker deleveraging did pressure the riskiest segments of the crypto market. On the positive side, we believe this technically-driven price action indicates that crypto's underlying fundamentals remain sound. Institutional investors—largely unscathed by the leverage unwind—are likely to lead the next advance. While the macro environment is more complex and risk-laden than at the start of the year, it remains generally supportive.

Observing "smart money" flows in the space (per Nansen), capital is rotating towards the EVM stack (e.g., Ethereum, Arbitrum), while Solana and Binance Smart Chain (BSC) lose momentum. To be clear, we use smart money flows only as a screening tool—not a buy signal—to identify where market depth, incentives, and developer/user activity are concentrating across protocols, DEXs, and blockchains. Meanwhile, stablecoin data points to capital rotation rather than new inflows, suggesting the market rebound will continue to rely on tactical incentive- and narrative-driven rotations in the short term.

The Great Grain Robbery Analogy

A well-known anecdote in commodity trading circles is "The Great Grain Robbery." It happened in 1973 and, despite the name, wasn't a robbery. It was the USSR's systematic, secret withdrawal of wheat and corn stocks from the open market over a month. This went undetected until global grain prices spiked 30%-50%, revealing a massive Soviet crop failure that had driven global food supplies to dangerously low levels.

The crypto liquidation cascade on October 10th—triggered by tariffs and causing numerous altcoins to plummet 40%-70%—bears a striking resemblance to the information dynamics of that event. In both cases, information asymmetry during a liquidity drought created massive market dislocations, disproportionately impacting less liquid, higher-beta assets.

Figure 1: Largest Liquidation Event in Crypto History

In 1973, the failure of US officials to detect the global shortfall stemmed from flaws in agricultural monitoring. Senator Henry Jackson accused them of either "incredible negligence" or "deliberate concealment." The episode later spurred satellite crop monitoring to prevent future information asymmetry.

The crypto cascade resulted not just from an information gap but from flawed execution mechanisms: altcoin liquidity is fragmented across exchanges, and decentralized protocols automatically liquidate over-collateralized altcoin positions as health metrics deteriorate. This often creates self-reinforcing selling pressure during price declines. Furthermore, market makers now predominantly hedge by shorting altcoins (due to their significantly higher beta vs. large caps, allowing for smaller position sizes). However, due to Automatic Deleveraging (ADL), many firms abruptly closed positions and withdrew buy-side liquidity, exacerbating the sell-off.

Both events underscore a timeless market truth: when liquidity vanishes and information asymmetry spikes, the highest-beta, most leveraged corners of any market become the pressure release valve, absorbing concentrated, forced selling. But what happens next?

The Recovery Trajectory

We view this sell-off as a necessary reset for the crypto market, not a cycle peak, potentially paving the way for a slow grind higher over the coming months. Prior to the October 10th event, our primary concern was that the current bull cycle might be ending prematurely. In fact, our survey from September 17th to October 3rd showed 45% of institutional investors believed the bull market was in its late stages.

Post-sell-off, we are instead more convinced of directional upside for crypto, though positioning in the coming months will depend more on market structure repair than headline catalysts. The liquidation cascade exposed fragilities in collateral standards, price feeds, and the resilience of cross-platform transfers.

Figure 2. The Short, Sharp Shock of Leverage Reshapes Crypto

However, leverage has largely been reset—our systematic leverage ratio (based on total derivatives open interest divided by total crypto market cap, ex-stablecoins) shows levels are only slightly above those at the start of the year (Chart 2). We believe this metric will be one of the most critical to monitor in the medium term. The current leverage ratio suggests the market will continue to face intermittent liquidity gaps and sharper risk tails until risk controls are harmonized and market maker depth fully normalizes.

Looking ahead, we expect market momentum to be primarily driven by institutional inflows—investors who were largely unaffected by this deleveraging event. Most institutions maintained either low leverage exposure or concentrated positions in large caps, while the retail-dominated altcoin space bore the brunt of the liquidation cascade. As institutional conviction returns, crypto markets can rebound, but this process could take months.

Consequently, we anticipate Bitcoin dominance will gradually increase over the next 2-3 months, potentially putting downward pressure on ETH/BTC and altcoin/BTC pairs before any final market rotation. Notably, based on breakevens for strangles and straddles, the market's implied probability distribution for Bitcoin's price over the next 3-6 months ranges from $160k to $90k, with an asymmetric skew to the upside (Fig. 3).

Figure 3. Implied BTC Price Distribution Based on Straddle/Strangle Breakevens

Tracking the Money Flows

We believe money flows are the most direct barometer of market participant conviction following a downturn. After the recent deleveraging, we observed price overshooting and murky narratives. To gauge positioning dynamics, we recommend monitoring where "smart money"—including investment funds, market makers, VCs, and consistently high-performing traders—is (re)deploying capital.

Tracking these flows can reveal which ecosystems are regaining depth, incentives, and developer/user activity—where short-term opportunities are clustering, and which protocols, DEXs, and blockchains to watch. This doesn't mean participants should simply buy these platforms' native tokens, as on-chain footprints could reflect yield farming, liquidity provision, basis/funding arbitrage, or airdrop positioning. Moreover, it's difficult to discern if smart money buying is tactical (incentive-driven) or sustainable. We believe a more prudent approach is to use smart money flows as a screening tool for opportunities.

Post-October 10th, capital has rotated towards Ethereum L1/L2 (i.e., Ethereum, Arbitrum), while Solana and BSC have lost momentum. Ethereum and Arbitrum lead in 7-day net inflows, with strengthening momentum over the past 30 days (Fig. 4). Simultaneously, capital is flowing out of Solana and BSC; outflows from BSC have moderated but remain negative.

Figure 4. Smart Money Flows – By Chain

The catalysts for these flows vary. For instance, Arbitrum's restart of incentive programs and DAO initiatives in October (e.g., DRIP Epoch 4 directing rewards to Aave lending/liquidity, Morpho, and gaming-related activities) reignited a flywheel effect just as liquidity was being redeployed.

We believe it may be prudent to watch tokens on the Base chain for potential inflection trades. Activity on Base surged over the weekend of October 25-26: the x402 ecosystem saw parabolic growth, and Farcaster's acquisition of the Clanker launchpad spawned new token issuance and user influx. This growth follows prior catalysts—ongoing Base token speculation, an open-source Solana bridge, Zora on Robinhood, and Coinbase's acquisition of Echo—which collectively expanded use cases, creating more avenues for liquidity rotation.

Meanwhile, in the sector rotation since October 10th, a "utility + yield" theme has replaced speculative plays as the dominant narrative. Amid the post-crash market dislocation, yield protocols are leading smart money flows, reopening paths to double-digit APYs (e.g., fixed/floating rate combinations, funding rate arbitrage), while the NFT/Metaverse/Gaming sector is being driven by strategy-driven mechanisms (e.g., PunkStrategy's deflationary NFT trading loops) and major deals (e.g., Coinbase's acquisition of UPONLY).

Figure 5. Money Flows – By Sector

The staking/restaking theme continues to gain strength, with institutional products making headlines—Grayscale launched the first US exchange-traded products for Ethereum and SOL staking. In short, smart money is clustering around areas with clear revenue paths, reliable incentives, and institutional on-ramps, facilitating a risk barbell via stablecoins for selective re-deployment (Fig. 5).

Stablecoin flow data also indicates a picture of capital rotation rather than new money influx. Over the past month, the 30-day stablecoin growth rate has declined for most major blockchains except Tron (Fig. 6). We interpret this as post-crash flows being redistributive rather than additive—liquidity is selectively moving to protocols with tangible catalysts, but the system isn't seeing a broad-based surge in stablecoin supply. Practically, this means the rebound will remain reliant on tactical incentive and narrative-driven rotations until a clear expansion in stablecoin circulating supply supports a broader rally.

Figure 6. Stablecoin Supply Momentum – By Chain

The tokenized asset space is a key area of institutional focus. In October, BlackRock's BUIDL allocated approximately $500 million each to Polygon, Avalanche, and Aptos (Fig. 7). This ~$1.5 billion total deployment highlights the value of Real-World Assets (RWAs) as a resilient narrative—attracting TradFi participation during volatile times by offering stable yields (tokenized Treasury yields of 4-6%) and liquidity, while avoiding the speculative excesses liquidated in the October 10th cascade.

These deployments are progressively moving beyond Ethereum (BUIDL's initial base), leveraging the strengths of each chain: Polygon offers Ethereum-compatible scalability with low fees; Avalanche's high-throughput Subnets are ideal for institutional DeFi integration; Aptos handles complex assets with its Move language's security features. While this appears to be a best-of-breed expansion by a single player (BlackRock), we believe its commitment to expanding RWA on-ramps amidst broader crypto uncertainty underscores the strategic value of the RWA space as a future growth vector.

Figure 7. Real-World Asset Flows – By Chain

Don't Ignore the Macro Backdrop

Finally, it's crucial to remember that crypto is still trading within a highly complex and increasingly risky macro environment. This sell-off cleared out the excess leverage typical of late-cycle bull runs. However, multiple macro factors continue to buffet investor confidence: trade friction (e.g., tariffs), geopolitical conflicts (e.g., US sanctions on Russian oil producers), soaring fiscal deficits (in the US and globally), and stretched valuations in other asset classes.

Despite Fed easing, the US 10-year Treasury yield remains around 4.0%, with its range anchored between 3.5%-4.5%. This stability partly explains our tolerance for yield curve steepening at the margins (curves typically flatten during prolonged easing). However, we believe the steepening trend could persist, and risk assets like US equities and crypto face downside correction risks if yields spike abruptly—for instance, if fiscal buffer mechanisms fail.

On the other hand, if long-term yields are indeed rising alongside US economic growth, it reflects fundamental economic strength more than policy concerns. Faster nominal growth and productivity gains can absorb higher discount rates, providing solid support for risk assets, including crypto. Notably, we believe economists are generally underestimating productivity—partly because factors like AI are boosting labor efficiency in ways not fully captured by official statistics.

Figure 8. US Labor Productivity Rising (10-Yr Annualized Growth Rate)

If true, this suggests the impact of macro volatility on risk assets via the discount rate channel may be diminishing. This would refocus crypto's drivers towards endogenous factors like liquidity, fundamentals, positioning, and pro-crypto regulatory developments (e.g., the US crypto market structure bill).

Conclusion

Overall, the crypto market's cyclical phase remains hotly debated, but we believe the recent leverage flush has set the stage for a slow grind higher over the coming months. Macro tailwinds—including Fed rate cuts, ample liquidity, and pro-crypto regulatory shifts like the GENIUS/CLARITY bills—continue to support the bullish case, potentially extending this cycle into 2026.

However, post-October 10th smart money flows resemble a selective re-risk rather than a broad-based rush back into risk assets. Capital is rotating towards the EVM stack (like Ethereum and Arbitrum) and "utility + yield" plays, while inflows into Solana and BSC have stalled and stablecoin growth has slowed. This indicates a reallocation of capital into specific verticals, not systemic injection.

Simultaneously, blockbuster RWA flows show institutions are expanding their on-chain footprint with a cautious, multi-platform strategy. Practically, we believe the near-term bounce will remain concentrated where incentives, product launches, and institutional on-ramps converge, though more sustainable crypto price action likely requires a broader liquidity recovery first. While crypto market sentiment remains in "panic" territory, the recent leverage cleanse is a precursor to medium-term strength, laying the groundwork for further gains in Q1 2026.

Summary

The large-scale cryptocurrency liquidation event on October 10th is viewed as a necessary market leverage reset, not the end of the bull market, creating a healthier structural foundation for near-to-medium-term gains. The market is expected to experience a slow recovery in the coming months rather than a rapid surge to new all-time highs, with institutional investors likely becoming the primary drivers of the next leg up. Fund flows indicate "smart money" is shifting from Solana and BSC towards Ethereum and EVM-tech stack ecosystems like Arbitrum, with yield protocols and Real-World Assets (RWA) gaining focus. Stablecoin data suggests this is a rotation of existing capital, not an influx of new money, meaning any rebound remains reliant on incentives and narrative-driven moves. Despite a complex macro environment, potential Fed rate cuts, ample liquidity, and crypto-friendly regulations could support the market, potentially extending the cycle into 2026.

Key Takeaways

* Despite persistent panic, we view the October liquidation event as a potential prelude to medium-term strength rather than a sign of weakness, creating a solid setup for Q4 performance.

* A full market recovery, however, may take months, with a gradual grind higher more likely in the interim than a vertical move to new record highs.

* Over the past 30 days, "smart money" flows within crypto have concentrated around the EVM tech stack and moved away from Solana and BSC.

Market Reset, Not Market Crash

Following the massive liquidation event on October 10th, we believe the crypto market has found a short-term bottom, with significantly improved market positioning. The market appears to have reset rather than crashed. We contend this sell-off has restored market leverage to a healthier structural state, which could support price action in the near-to-medium term. However, a slow ascent is more probable in the coming months than a direct sprint to new all-time highs.

Technically, this deleveraging event was more of a fundamental market adjustment than a solvency crisis, although the altcoin sell-off and market maker deleveraging did pressure the riskiest segments of the crypto market. On the positive side, we believe this technically-driven price action indicates that crypto's underlying fundamentals remain sound. Institutional investors—largely unscathed by the leverage unwind—are likely to lead the next advance. While the macro environment is more complex and risk-laden than at the start of the year, it remains generally supportive.

Observing "smart money" flows in the space (per Nansen), capital is rotating towards the EVM stack (e.g., Ethereum, Arbitrum), while Solana and Binance Smart Chain (BSC) lose momentum. To be clear, we use smart money flows only as a screening tool—not a buy signal—to identify where market depth, incentives, and developer/user activity are concentrating across protocols, DEXs, and blockchains. Meanwhile, stablecoin data points to capital rotation rather than new inflows, suggesting the market rebound will continue to rely on tactical incentive- and narrative-driven rotations in the short term.

The Great Grain Robbery Analogy

A well-known anecdote in commodity trading circles is "The Great Grain Robbery." It happened in 1973 and, despite the name, wasn't a robbery. It was the USSR's systematic, secret withdrawal of wheat and corn stocks from the open market over a month. This went undetected until global grain prices spiked 30%-50%, revealing a massive Soviet crop failure that had driven global food supplies to dangerously low levels.

The crypto liquidation cascade on October 10th—triggered by tariffs and causing numerous altcoins to plummet 40%-70%—bears a striking resemblance to the information dynamics of that event. In both cases, information asymmetry during a liquidity drought created massive market dislocations, disproportionately impacting less liquid, higher-beta assets.

Figure 1: Largest Liquidation Event in Crypto History

In 1973, the failure of US officials to detect the global shortfall stemmed from flaws in agricultural monitoring. Senator Henry Jackson accused them of either "incredible negligence" or "deliberate concealment." The episode later spurred satellite crop monitoring to prevent future information asymmetry.

The crypto cascade resulted not just from an information gap but from flawed execution mechanisms: altcoin liquidity is fragmented across exchanges, and decentralized protocols automatically liquidate over-collateralized altcoin positions as health metrics deteriorate. This often creates self-reinforcing selling pressure during price declines. Furthermore, market makers now predominantly hedge by shorting altcoins (due to their significantly higher beta vs. large caps, allowing for smaller position sizes). However, due to Automatic Deleveraging (ADL), many firms abruptly closed positions and withdrew buy-side liquidity, exacerbating the sell-off.

Both events underscore a timeless market truth: when liquidity vanishes and information asymmetry spikes, the highest-beta, most leveraged corners of any market become the pressure release valve, absorbing concentrated, forced selling. But what happens next?

The Recovery Trajectory

We view this sell-off as a necessary reset for the crypto market, not a cycle peak, potentially paving the way for a slow grind higher over the coming months. Prior to the October 10th event, our primary concern was that the current bull cycle might be ending prematurely. In fact, our survey from September 17th to October 3rd showed 45% of institutional investors believed the bull market was in its late stages.

Post-sell-off, we are instead more convinced of directional upside for crypto, though positioning in the coming months will depend more on market structure repair than headline catalysts. The liquidation cascade exposed fragilities in collateral standards, price feeds, and the resilience of cross-platform transfers.

Figure 2. The Short, Sharp Shock of Leverage Reshapes Crypto

However, leverage has largely been reset—our systematic leverage ratio (based on total derivatives open interest divided by total crypto market cap, ex-stablecoins) shows levels are only slightly above those at the start of the year (Chart 2). We believe this metric will be one of the most critical to monitor in the medium term. The current leverage ratio suggests the market will continue to face intermittent liquidity gaps and sharper risk tails until risk controls are harmonized and market maker depth fully normalizes.

Looking ahead, we expect market momentum to be primarily driven by institutional inflows—investors who were largely unaffected by this deleveraging event. Most institutions maintained either low leverage exposure or concentrated positions in large caps, while the retail-dominated altcoin space bore the brunt of the liquidation cascade. As institutional conviction returns, crypto markets can rebound, but this process could take months.

Consequently, we anticipate Bitcoin dominance will gradually increase over the next 2-3 months, potentially putting downward pressure on ETH/BTC and altcoin/BTC pairs before any final market rotation. Notably, based on breakevens for strangles and straddles, the market's implied probability distribution for Bitcoin's price over the next 3-6 months ranges from $160k to $90k, with an asymmetric skew to the upside (Fig. 3).

Figure 3. Implied BTC Price Distribution Based on Straddle/Strangle Breakevens

Tracking the Money Flows

We believe money flows are the most direct barometer of market participant conviction following a downturn. After the recent deleveraging, we observed price overshooting and murky narratives. To gauge positioning dynamics, we recommend monitoring where "smart money"—including investment funds, market makers, VCs, and consistently high-performing traders—is (re)deploying capital.

Tracking these flows can reveal which ecosystems are regaining depth, incentives, and developer/user activity—where short-term opportunities are clustering, and which protocols, DEXs, and blockchains to watch. This doesn't mean participants should simply buy these platforms' native tokens, as on-chain footprints could reflect yield farming, liquidity provision, basis/funding arbitrage, or airdrop positioning. Moreover, it's difficult to discern if smart money buying is tactical (incentive-driven) or sustainable. We believe a more prudent approach is to use smart money flows as a screening tool for opportunities.

Post-October 10th, capital has rotated towards Ethereum L1/L2 (i.e., Ethereum, Arbitrum), while Solana and BSC have lost momentum. Ethereum and Arbitrum lead in 7-day net inflows, with strengthening momentum over the past 30 days (Fig. 4). Simultaneously, capital is flowing out of Solana and BSC; outflows from BSC have moderated but remain negative.

Figure 4. Smart Money Flows – By Chain

The catalysts for these flows vary. For instance, Arbitrum's restart of incentive programs and DAO initiatives in October (e.g., DRIP Epoch 4 directing rewards to Aave lending/liquidity, Morpho, and gaming-related activities) reignited a flywheel effect just as liquidity was being redeployed.

We believe it may be prudent to watch tokens on the Base chain for potential inflection trades. Activity on Base surged over the weekend of October 25-26: the x402 ecosystem saw parabolic growth, and Farcaster's acquisition of the Clanker launchpad spawned new token issuance and user influx. This growth follows prior catalysts—ongoing Base token speculation, an open-source Solana bridge, Zora on Robinhood, and Coinbase's acquisition of Echo—which collectively expanded use cases, creating more avenues for liquidity rotation.

Meanwhile, in the sector rotation since October 10th, a "utility + yield" theme has replaced speculative plays as the dominant narrative. Amid the post-crash market dislocation, yield protocols are leading smart money flows, reopening paths to double-digit APYs (e.g., fixed/floating rate combinations, funding rate arbitrage), while the NFT/Metaverse/Gaming sector is being driven by strategy-driven mechanisms (e.g., PunkStrategy's deflationary NFT trading loops) and major deals (e.g., Coinbase's acquisition of UPONLY).

Figure 5. Money Flows – By Sector

The staking/restaking theme continues to gain strength, with institutional products making headlines—Grayscale launched the first US exchange-traded products for Ethereum and SOL staking. In short, smart money is clustering around areas with clear revenue paths, reliable incentives, and institutional on-ramps, facilitating a risk barbell via stablecoins for selective re-deployment (Fig. 5).

Stablecoin flow data also indicates a picture of capital rotation rather than new money influx. Over the past month, the 30-day stablecoin growth rate has declined for most major blockchains except Tron (Fig. 6). We interpret this as post-crash flows being redistributive rather than additive—liquidity is selectively moving to protocols with tangible catalysts, but the system isn't seeing a broad-based surge in stablecoin supply. Practically, this means the rebound will remain reliant on tactical incentive and narrative-driven rotations until a clear expansion in stablecoin circulating supply supports a broader rally.

Figure 6. Stablecoin Supply Momentum – By Chain

The tokenized asset space is a key area of institutional focus. In October, BlackRock's BUIDL allocated approximately $500 million each to Polygon, Avalanche, and Aptos (Fig. 7). This ~$1.5 billion total deployment highlights the value of Real-World Assets (RWAs) as a resilient narrative—attracting TradFi participation during volatile times by offering stable yields (tokenized Treasury yields of 4-6%) and liquidity, while avoiding the speculative excesses liquidated in the October 10th cascade.

These deployments are progressively moving beyond Ethereum (BUIDL's initial base), leveraging the strengths of each chain: Polygon offers Ethereum-compatible scalability with low fees; Avalanche's high-throughput Subnets are ideal for institutional DeFi integration; Aptos handles complex assets with its Move language's security features. While this appears to be a best-of-breed expansion by a single player (BlackRock), we believe its commitment to expanding RWA on-ramps amidst broader crypto uncertainty underscores the strategic value of the RWA space as a future growth vector.

Figure 7. Real-World Asset Flows – By Chain

Don't Ignore the Macro Backdrop

Finally, it's crucial to remember that crypto is still trading within a highly complex and increasingly risky macro environment. This sell-off cleared out the excess leverage typical of late-cycle bull runs. However, multiple macro factors continue to buffet investor confidence: trade friction (e.g., tariffs), geopolitical conflicts (e.g., US sanctions on Russian oil producers), soaring fiscal deficits (in the US and globally), and stretched valuations in other asset classes.

Despite Fed easing, the US 10-year Treasury yield remains around 4.0%, with its range anchored between 3.5%-4.5%. This stability partly explains our tolerance for yield curve steepening at the margins (curves typically flatten during prolonged easing). However, we believe the steepening trend could persist, and risk assets like US equities and crypto face downside correction risks if yields spike abruptly—for instance, if fiscal buffer mechanisms fail.

On the other hand, if long-term yields are indeed rising alongside US economic growth, it reflects fundamental economic strength more than policy concerns. Faster nominal growth and productivity gains can absorb higher discount rates, providing solid support for risk assets, including crypto. Notably, we believe economists are generally underestimating productivity—partly because factors like AI are boosting labor efficiency in ways not fully captured by official statistics.

Figure 8. US Labor Productivity Rising (10-Yr Annualized Growth Rate)

If true, this suggests the impact of macro volatility on risk assets via the discount rate channel may be diminishing. This would refocus crypto's drivers towards endogenous factors like liquidity, fundamentals, positioning, and pro-crypto regulatory developments (e.g., the US crypto market structure bill).

Conclusion

Overall, the crypto market's cyclical phase remains hotly debated, but we believe the recent leverage flush has set the stage for a slow grind higher over the coming months. Macro tailwinds—including Fed rate cuts, ample liquidity, and pro-crypto regulatory shifts like the GENIUS/CLARITY bills—continue to support the bullish case, potentially extending this cycle into 2026.

However, post-October 10th smart money flows resemble a selective re-risk rather than a broad-based rush back into risk assets. Capital is rotating towards the EVM stack (like Ethereum and Arbitrum) and "utility + yield" plays, while inflows into Solana and BSC have stalled and stablecoin growth has slowed. This indicates a reallocation of capital into specific verticals, not systemic injection.

Simultaneously, blockbuster RWA flows show institutions are expanding their on-chain footprint with a cautious, multi-platform strategy. Practically, we believe the near-term bounce will remain concentrated where incentives, product launches, and institutional on-ramps converge, though more sustainable crypto price action likely requires a broader liquidity recovery first. While crypto market sentiment remains in "panic" territory, the recent leverage cleanse is a precursor to medium-term strength, laying the groundwork for further gains in Q1 2026.